Cleantech IPOs have ground to a halt, and industry insiders at the Clean-Tech Investor Summit this week said they expect the no-exit environment to continue.
Mohr Davidow Ventures partner Will Coleman, who moderated a cleantech-financing panel at the event, asked panelists to guess when the IPOs would come back. “The second quarter, which doesn’t mean the markets [will have] reopened,” said Gary Vollen, managing director of the Stanford Group Co. “I think the third quarter, probably,” guessed Jeff Lipton, managing director of Jeffries & Co. Inc.
None are going to happen within the next three months, and IPOs take longer than a quarter to plan anyway, Vollen said. “We’ve been looking at a closed window for some time,” he said. “Companies that had applied for IPOs in these three months … have had to go out for other investments and postpone their IPOs,” and additional funding before an exit could make later IPOs less attractive to investors, he added.
The fact that they don’t expect any IPOs this quarter is not exactly surprising, and the good news is that they believe IPOs will return to the sector. With the new U.S. president in place, Vollen said that political activity in Washington could help trading improve. “I don’t think that whatever structural holes there are in the IPO market will prevent IPOs from taking place [in the future,]” he said. “I think IPOs will come back.”
Lipton pointed out that even in past downturns, IPOs have still happened. He said that investors need to see more positive economic data and to see corporate earnings start to turn around before stocks will rise, making IPOs attractive again. “We need to stop the bleeding, so to speak,” he said.
He added that, initially, the bar will be higher for cleantech IPOs than they have been in the past. The pointed to SunPower Corp. (NSDQ:SPWRA and SPWRB), which saw its share price jump 41 percent on its Nasdaq debut in 2005. At the time, the company had 25 megawatts of manufacturing capacity, he said. “When the market reopens, a company with [25 megawatts of capacity] probably won’t even get out.”
Photo courtesy of Taylor Hain, via a Flickr Creative Commons license